The Internet has improved the efficiency of advertising. Costs are usually lower, and customer targeting is generally better than advertising via traditional media such as billboards and printed publications.
Internet advertising models such as “cost-per-click” and “cost-per-action” can be used to target potential customers and gauge their exposure to advertisements. In cost-per-click and cost-per-action models, web sites display clickable links from advertisers. Each time a user clicks on an advertiser's link, the advertiser pays an advertising network, which in turn pays the publisher a share of the payment. In cost-per-action models, payment is based solely on qualifying actions such as sales or registrations.
Cost per thousand impressions (CPM) is another Internet advertising model. CPM is used by Internet marketers to price ad banners. Sites that sell advertising will guarantee an advertiser a certain number of impressions (number of times an ad banner is downloaded and presumably seen by visitors), and then set a rate based on that guarantee times a CPM rate.
These models allow companies to gauge their exposure to potential customers. Metrics can be generated from the number of times an ad is clicked.
Although these models focus on quantity (the number of clicks, number of transactions, number of downloads), they do not account for the effectiveness of specific advertisements (e.g., whether a color ad is more effective than a black/white ad), nor do they account for the quality of targeted customers (e.g., a disinterested party versus a high-value customer).